If studies suggest that the price elasticity of demand for cigarettes is 0.2 (in absolute terms),...
If studies suggest that the price elasticity of demand for cigarettes is 0.2 (in absolute terms), and the government wishes to increase cigarette consumption by 25%, how much of a price increase by taxation would be required to bring this about? (60 marks)
Is this policy to reduce smoking likely to have:
(a) a larger effect in the longer term than in the shorter term? (20 marks)
(b) a larger effect on younger smokers than older smokers? (20 marks)
Homework Answers
how much of a price increase by taxation would be required to bring this about?
Answer:(25*10)/2 = 125 increase in price by taxation would be required to increase consumption by 25%.
Is this policy to reduce smoking likely to have:
(a) a larger effect in the longer term than in the shorter term?
Answer: It will have a larger effect in the short run than in the long run as consumption of cigarette is a good which does not follow the law of demand since cigarette is a addictive good.
(b) a larger effect on younger smokers than older smokers?
Answer: There will be a larger effect on younger smokers than older smokers since, younger generations are more prone to addictive goods.
Add Answer to:
If studies suggest that the price elasticity of demand for
cigarettes is 0.2 (in absolute terms),...
Consider public policy aimed at smokin a. Studies indicate that the price elasticity of demand for...
Consider public policy aimed at smokin a. Studies indicate that the price elasticity of demand for cigarettes is about 0.4. If a pack of cigarettes currently costs $3 and the government wants to reduce smoking by 20%, by how much should it increase the price? (10 pts) b. If the government permanently increases the price of cigarettes, will the policy have a larger effect on smoking 1 year from now or 5 years from now? (5 pts) c. Studies also...
20. A 2014 paper by Grace et al. estimated that the cross-price elasticity between e-cigarettes and...
20. A 2014 paper by Grace et al. estimated that the cross-price elasticity between e-cigarettes and traditional cigarettes is .16 in their sample of New Zealand smokers. Suppose the New Zealand government wishes to reduce smoking (both traditional cigarettes and e-cigarettes) through higher excise taxes on traditional cigarettes. What are the implications of the estimated cross-price elasticity on the effectiveness of the tax policy? a. E-cigs and cigarettes are estimated to be substitute goods. This relationship increases the cigarette tax's...
Studies indicate that the price elasticity of demand for cigarettes is about -0.4. A government policy...
Studies indicate that the price elasticity of demand for cigarettes is about -0.4. A government policy aimed at reducing smoking doubled the price of a pack of cigarettes. This government policy should have reduced smoking by a)30% b)40% c)80% d)25% e)20%
3. Addiction: Taxation Issues: Consider the issue of cigarette taxation: Suppose the price elasticities for cigarettes...
3. Addiction: Taxation Issues: Consider the issue of cigarette taxation: Suppose the price elasticities for cigarettes by habitual smokers and potential smokers are -0.25 and -4.0. Ad- ditionally, suppose the relative share of habitual smokers in the population is m. The gov- ernment is considering levying a new 20% tax on cigarettes. Suppose the current price of cigarettes is $5, of which $1 is tax. (a) For each type of consumer, calculate the expected reduction in consumption resulting from the...
10. Problems and Applications Q10 Consider public policy aimed at smoking. Studies indicate that the price...
10. Problems and Applications Q10 Consider public policy aimed at smoking. Studies indicate that the price elastioty of demand for cigarettes is about 0.2 If a pack ofagarettes currenty costs $5 and the government wants to reduce smoking by 10% it should increase the price by If the government permanently increases the price of cigarettes, the effect on smoking 1 year from now will be % ▼ than the effect 5 years from now Studies also find that teenagers have...
Question 1 (5 marks) Studies have shown that the price elasticity for GP consultations is -0.2...
Question 1 (5 marks) Studies have shown that the price elasticity for GP consultations is -0.2 and for emergency department servicesit is -0.05. If the government promises to reduce the co-payment of GP services by 10% what will be the impact (in percentage terms) on GP utilisation. Will total expenditure on GP services increase or decrease? (2 marks) If a price rise of 10% is imposed on emergency department services, what will the impact be (in percentage terms) on ED...
Topic: Tobacco products The government's tax/subsidy policy in these areas and any objectives of the tax...
Topic: Tobacco products The government's tax/subsidy policy in these areas and any objectives of the tax policy. In the United States, federal, state, and local governments tax tobacco. Tobacco products are taxed in two ways: the unit tax, which is based on a constant nominal rate per unit (that is, per pack of cigarettes), and the ad valorem tax, which is based on a constant fraction of either wholesale or retail price. Currently, federal taxes on cigarettes, small cigars, and...
Refer to Figure 5-1. A perfectly elastic demand curve is shown in Panel D. Panel A. Panel C...
Refer to Figure 5-1. A perfectly elastic demand curve is shown
in
Panel D.
Panel A.
Panel C.
Panel B.
Refer to Figure 5-5. The data in the diagram indicates that
DVDs
are luxury goods.
are both luxury goods and price inelastic goods.
are price inelastic goods.
are both necessities and price inelastic goods.
are necessities.
3-
Consider the following pairs of items:
a. shampoo and conditioner
b. iPhones and earbuds
c. a laptop computer and a desktop computer
d....
need some assistance with this. thank you very much 1. Free radicals are __________ . (A)...
need some assistance with this. thank you very much 1. Free radicals are __________ . (A) molecules that have lost an electron (C) molecules with extra neutrons (B) escaped political prisoners (D) produced by vitamins 2. The chromosomal location of the APC gene was originally identified by finding a region of the genome that was _________ in patients with colorectal cancer. (A) deleted (B) rearranged (C) normal (D) unclear 3. The National Health Service of the United Kingdom (Britain) has...
need some assistance with this please. thank you very much 1. Free radicals are __________ ....
need some assistance with this please. thank you very much 1. Free radicals are __________ . (A) molecules that have lost an electron (C) molecules with extra neutrons (B) escaped political prisoners (D) produced by vitamins 2. The chromosomal location of the APC gene was originally identified by finding a region of the genome that was _________ in patients with colorectal cancer. (A) deleted (B) rearranged (C) normal (D) unclear 3. The National Health Service of the United Kingdom (Britain)...
Consider public policy aimed at smokin a. Studies indicate that the price elasticity of demand for cigarettes is about 0.4. If a pack of cigarettes currently costs $3 and the government wants to reduce smoking by 20%, by how much should it increase the price? (10 pts) b. If the government permanently increases the price of cigarettes, will the policy have a larger effect on smoking 1 year from now or 5 years from now? (5 pts) c. Studies also...
20. A 2014 paper by Grace et al. estimated that the cross-price elasticity between e-cigarettes and traditional cigarettes is .16 in their sample of New Zealand smokers. Suppose the New Zealand government wishes to reduce smoking (both traditional cigarettes and e-cigarettes) through higher excise taxes on traditional cigarettes. What are the implications of the estimated cross-price elasticity on the effectiveness of the tax policy? a. E-cigs and cigarettes are estimated to be substitute goods. This relationship increases the cigarette tax's...
3. Addiction: Taxation Issues: Consider the issue of cigarette taxation: Suppose the price elasticities for cigarettes by habitual smokers and potential smokers are -0.25 and -4.0. Ad- ditionally, suppose the relative share of habitual smokers in the population is m. The gov- ernment is considering levying a new 20% tax on cigarettes. Suppose the current price of cigarettes is $5, of which $1 is tax. (a) For each type of consumer, calculate the expected reduction in consumption resulting from the...
10. Problems and Applications Q10 Consider public policy aimed at smoking. Studies indicate that the price elastioty of demand for cigarettes is about 0.2 If a pack ofagarettes currenty costs $5 and the government wants to reduce smoking by 10% it should increase the price by If the government permanently increases the price of cigarettes, the effect on smoking 1 year from now will be % ▼ than the effect 5 years from now Studies also find that teenagers have...
Refer to Figure 5-1. A perfectly elastic demand curve is shown
in
Panel D.
Panel A.
Panel C.
Panel B.
Refer to Figure 5-5. The data in the diagram indicates that
DVDs
are luxury goods.
are both luxury goods and price inelastic goods.
are price inelastic goods.
are both necessities and price inelastic goods.
are necessities.
3-
Consider the following pairs of items:
a. shampoo and conditioner
b. iPhones and earbuds
c. a laptop computer and a desktop computer
d....
Most questions answered within 3 hours.
-
Problem: The equilibrium constant, Keq, is 5 x 10^-11 m HCO3
<-----------> H^+ + CO3^-2 Calculate...
asked 1 minute ago -
Explain how blackbody radiation led to the idea of "quanta."
Will rate answer!
asked 6 minutes ago -
Two noble gases (Ne and He) are injected into the chambers of an
insulated container. Each...
asked 1 minute ago -
Suppose you purchase a zero coupon bond with a face value of
$1,000, maturing in 18...
asked 6 minutes ago -
Do you believe that the $785,000 amount at the center of the
Overstock-Grant Thornton dispute was...
asked 7 minutes ago -
Find and , the mean and standard deviation of the
sampling distribution of :
μ = 25,...
asked 31 minutes ago -
According to the manufacturer of a certain candy, 9% of the
candy produced are red. If...
asked 49 minutes ago -
A Eucher Deck consists of 24 cards. In a four- player game, each
player is dealt...
asked 1 hour ago -
This is a challenging question.
The titration of an impure sample of KHP found that 36.00...
asked 1 hour ago -
1. Starting from rest, an automatic subway train is controlled
by a computer
that causes it’s...
asked 31 minutes ago -
You place a block of
ice (mass of 3 kg) into a test chamber filled with...
asked 1 hour ago -
If a benzene ring has one -CF3 group as a
substituent, will the next substituent add...
asked 55 minutes ago